Pak­istan cen­tral bank holds rates at 5.75 %

Karachi, Pak­istan - Pak­istan’s cen­tral bank left its in­ter­est rate un­changed in the first meet­ing headed by gover­nor Tariq Ba­jwa, who was ap­pointed this month af­ter ‘mis­com­mu­ni­ca­tion’ led to the na­tion’s big­gest cur­rency plunge in nine years.

The State Bank of Pak­istan kept tar­get pol­icy rate at 5.75 per cent, Ba­jwa said on Satur­day at a brief­ing in Karachi.

The de­ci­sion was pre­dicted by all 20 economists in a Bloomberg sur­vey.

The cen­tral bank has not changed the rate since May last year, the long­est streak in more than a decade, ac­cord­ing to data com­piled by Bloomberg.

The gov­ern­ment ap­pointed for­mer tax agency chief Ba­jwa days af­ter the Pak­istani ru­pee plunged three per cent on July 5, a de­cline Fi­nance Min­is­ter Ishaq Dar put down to ‘mis­com­mu­ni­ca­tion’. The ru­pee has since re­couped most of the loss.

Con­sumer prices rose 3.9 per cent in June, lower than 4.45 per cent es­ti­mate by economists sur­veyed by Bloomberg.

The na­tion’s cur­rent ac­count gap more than dou­bled to US$12.1bn in year ended June com­pared with US$4.9bn year ear­lier. The ru­pee has weak­ened 0.9 per cent against the dol­lar this year.

“Eco­nomic growth is across all sec­tors,” Ba­jwa told re­porters in Karachi. Though ‘the cur­rent ac­count is a chal­lenge’ along with the ex­change rate, which the cen­tral bank is ‘work­ing to meet’, he said.

In­fla­tion ‘still re­mains sub­dued’ and ex­ter­nal pres­sures are man­age­able, Shah­baz Ashraf, re­search head at Arif Habib Ltd said by phone be­fore the de­ci­sion.

“The cen­tral bank may go for a hike af­ter Novem­ber when in­fla­tion is ex­pected to see an up tick,” Ashraf said.